Selecting a target maturity fund based on your horizon and risk appetite

Constitution of underlying indexes doesn't matter since all the three categories of bonds they invest in are safe

The assets under management (AUM) of target maturity funds (TMFs) have risen from Rs 29,601 crore in October 2020 to Rs 1,21,855 crore in October 2022. Fixed maturity plans (FMPs), which also allow investors to lock in existing interest rates, have seen a steep decline in AUM, from Rs 1,54,442 crore in October 2018 to Rs 15,250 crore in October 2022 (data source: Morningstar India).

“TMFs offer a fixed-income investment with a defined maturity date, high visibility of returns (there is no guarantee, but there is high visibility if the fund is held till maturity) and good credit quality portfolio.